Trade, tech at risk in US-China feud

Beijing, July 27: They have the largest economies in the world. They spend more than anyone else on their militaries. From high-tech chips to control of the high seas, their interests are closely intertwined.

The ongoing sharp deterioration in US-China ties poses risks to both countries and the rest of the world. In the latest escalation, a US consulate in Chengdu in southwestern China has been shuttered on Monday, in retaliation for the US shutting down its consulate in Houston.

With the US presidential campaign heating up, all bets are that relations with China will only get worse.

Both countries already have suffered heavy losses in a tariff war that erupted in 2018 over Beijing's technology ambitions and trade surplus. If talks on ending the dispute fail, the world could face downward pressure on trade at a time when the global economy is reeling from the pandemic.

The US is China's biggest single-country export market, even after President Donald Trump imposed punitive tariffs on Chinese goods. And China is the No. 3 market for American exporters, as well as a huge market for goods and services produced in China by US companies ranging from General Motors Co to Burger King.

Chinese purchases of American farm goods, semiconductors and other goods declined 11.4 per cent last year but still exceeded $100 billion. Exports to China support just under 1 million American jobs, according to the US-China Business Council.

US and Chinese producers of telecom, computer, medical and other technology and their markets are tightly interwoven. Apple, Dell, Hewlett-Packard and others rely on Chinese factories to assemble most of their smartphones, computers and other consumer electronics. Those factories need processor chips and other components from the United States,

Japan, Taiwan and

Europe.

The disruption caused by moves including the Trump administration's curbs on Chinese tech giant Huawei's access to US components and technology threatens to disrupt those flows and cost suppliers, including Silicon Valley companies, billions of dollars in lost revenue.

China is also a top market for Apple and other US tech brands.

The United States often is the top market for China's highest-value-added goods.

Beijing has been urging exporters to find other markets, but many say Asian and even European markets won't buy such high-value goods.